Personal Finance Hacks » Housing

The Giant Pool of Money

MB — Tue, 13 May 2008 19:39:31 +0000

One of the highlights of my week is seeing a new episode of “This American Life” pop into my podcasts folder in iTunes. For those of you not familiar with the show, it is a one hour radio program produced by Chicago Public Radio and hosted by Ira Glass.

This weeks show “The Giant Pool of Money” should hold special interest for readers of this blog. It is a wonderful explanation of the housing crisis, going step by step how it developed, and who were the players, from the borrowers to the ultimates purchasers of the mortgages.

If you are looking for more “This American Life” content after listening, you can check out this list of staff favorites.

Originally posted on pfhacks.com: The Giant Pool of Money

SubPrime Mortgages Explained

MB — Sat, 19 Apr 2008 12:55:46 +0000

I have read a lot about the subprime mortgage crisis, and found most of the explanations a little hard to get my head around.

A friend e-mailed me a link to a presentation (hosted on Google Apps), that I feel, does the best job of explaining the whole subprime mess.

Warning: The presentation does contain adult language, so if you are offended by four letter words in a comedic context, this might not be for you.

Originally posted on pfhacks.com: SubPrime Mortgages Explained

New Home Sales Down 26% in 2007

MB — Tue, 29 Jan 2008 16:35:21 +0000

The New York Times is reporting that sales of new homes fell by 26% last year. This is the biggest drop since the US government began keeping records in 1963.

Prices are also declining. The December median new home price declined 10.9% from a year ago, to $219,200. For the full year, new homes did manage to squeak out a 0.2 gain.

Despite the declines in prices, supply continues to far outweigh demand. The current backlog of new homes is 9.6 months, per The Commerce Department.

Originally posted on pfhacks.com: New Home Sales Down 26% in 2007

Home Prices Still Have Room to Fall

MB — Sun, 06 Jan 2008 04:48:26 +0000

A study featured in the January 3, 2008 edition of The Wall Street Journal indicates that national housing prices would need to fall by 15% over the next five years, while rents would need to increase by 4% per year in order for the historical relationship between the two to return to a normal level.

The historic rate of average annual rents to average home prices since 1960 is about 5% to 5.25%. The ratio at the end of 2006 stood at 3.48%.

Just because the ratio is still out of line with it’s historic average doesn’t necessarily mean that home prices will continue to decline. It may take a number of years for this differential to correct itself, but I think it is something that a potential home buyer should consider.

Source: Wall Street Journal
Home Prices Must Fall Far
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Technorati Tags:
money, economy, housing

Originally posted on pfhacks.com: Home Prices Still Have Room to Fall